UK Budget 2018 roundup

Setting the scene:

The 2018 economic growth forecast was upgraded from 1.3% to 1.6% and public borrowing this year is expected to be £11.6bn lower than forecast in March.

Key points are:

Income tax

The personal allowance and higher rate threshold will increase earlier than expected to £12,500 and £50,000 respectively from April 2019. The income tax rates and bands for Scottish taxpayers will be announced in Scottish Budget on 12 December.

There are no other changes to income tax bands or allowances.

Pensions

The pension lifetime allowance (LTA) will rise to £1,055,000 from April 2019.

Reassuringly, there are no changes to pension annual allowances (AA). The standard AA remains at £40,000, the money purchase AA stays at £4,000 (with no carry forward) and there are no changes to the high income AA taper rules.

Capital gains tax

The capital gains tax allowance will increase by £300 to £12,000 from April 2019.

Inheritance tax

As expected, the IHT nil rate band will remain frozen at £325,000 until April 2021.

The residence nil rate band will increase from £125,000 to £150,000 from April 2019, allowing some couples to leave up to £950,000 to future generations free of IHT.

Trust taxation

There will be a consultation to consider the simplification and fairness of trust taxation (NB the existing IHT regime for trusts is notoriously complex and any attempt to simplify it is extremely welcome).

ISAs

Annual ISA limits stay at £20,000 per person, with no reduction in the range of ISA options available to meet different needs.

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